How retirement is being reinvented worldwide

Commuters walk across London Bridge during morning rush hour in London. England, like many European countries, faces debt problems rooted in
part in the demographics of aging and the cost of pension programs.

Boston — When business conditions in Japan forced him to close his small rice shop at age 63, Yasunori Izumi didn't take the event as a cue to retire. Instead, prompted by concern about covering expenses, he found a new job as a taxi driver – and plans to keep at it for years to come.

In Britain, postal carrier Kevin Beazer is just 45 years old, but he's already looking warily at his financial future. He's seen his expected pension pared back – reflecting a fiscal squeeze that's sweeping through Europe – and figures he'll need a part-time job after he retires.

In coastal Alabama, Donna Gainey is still working at age 64, but not out of financial necessity. She simply loves her job as a city clerk and the extra income it provides.

A global recession has helped to accelerate the trend, by putting pressure on many people over age 55 to keep working if they can. But the real impetus behind an aging workforce is demographic. People are living longer. Older people are also becoming a larger share of the population in many nations, simply because of declining birthrates and shrinking ranks of young people.

All this is amplified by the arrival of the massive boomer generation on the threshold of retirement. The baby boom after World War II didn't just happen in the United States but also in places like Europe and Australia as well. The first boomers are hitting 65 this month.

Add these forces together, and the result is a "global aging" trend that's already a major influence on the world economy – one that promises to transform the meaning of "golden years." "It's not really the end of retirement. It's the reinvention of retirement," says William Novelli, a former chief executive of the AARP now at Georgetown University in Washington, D.C. "Work is an increasing part of the so-called retirement years."

In the old days, workers in developed nations often reached a clean-break moment when careers came to end. An office party. The infamous gold watch. Perhaps a move to a sun-dappled place like Florida.

People literally retired, exiting the labor force for good. That model hasn't disappeared completely, by any means. But life after age 60 is undergoing significant change. It can still be a time for golf and swimming pools, but for millions of people it's also a time for clinging to a full-time job, reentering the workforce as a part-timer, or even starting a new business.

The reasons include positive ones like a quest for personal fulfillment. As longevity increases, people increasingly view work as one important way to keep their lives active and meaningful. "The very notion of 'retirement' – in that sense of uninterrupted leisure – is not nearly as popular among boomers" as among prior generations, says Neil Howe, a historian who tracks generational traits at LifeCourse Associates, a consulting firm in Great Falls, Va. "The idea of remaining contributors, and not wanting to simply be dependent consumers, is ... very important." In fact, some boomers may find that their most fulfilling career comes "post-retirement," as added wisdom blends with job descriptions that are higher on creativity or lower on stress.

The most obvious reason behind the world's graying workforce, though, has to do with pocketbook imperatives. Put simply, if people live longer, someone has to support them. Part of the answer, experts say, is that people of advancing years will play a bigger role in supporting themselves.

Governments are already feeling pressure to boost official ages of retirement, if they don't want to sink their economies under the weight of public debt. Riots in France before a parliamentary vote on the retirement age last fall may offer a foretaste of policy battles to come in the US and elsewhere. The world in general is on course for demographic aging on an unprecedented scale. Ultimately, the way it plays out is likely to have major implications for everything from living standards to the global balance of power among nations.

AS THE WORLD TURNS SILVER

Yang Jinrong symbolizes how this "new retirement" is already taking root worldwide. She works as a bookkeeper in the bustling coastal city of Tianjin, China. Now in her 50s, Ms. Yang expects to help support herself and her family by crunching numbers for a local medical equipment company into her 60s or even 70s.

She works because she likes to, but also because of a financial squeeze in China called the "4-2-1 problem." That's the notion that, thanks to China's one-child policy, each young worker may need to help take care of two parents and four grandparents.

"This problem has no solution," says Yang's son, 26-year-old Sun Quanxin. "It is beyond my financial ability." So for this family, part of the answer is for Yang to keep working.

In many ways, Asia represents the epicenter of global aging. Arguably no continent faces greater challenges in adjusting to fast-changing demographics.

The region also reflects another essential fact about global graying: It's not just a rich-country phenomenon. The prevailing theory has always been that societies age only once they've achieved widespread prosperity. Yet the catchphrase about China is that it's "growing old before it grows rich." And the same thing is happening even in developing nations where governments haven't shown a China-style zeal for population control.

Longer life spans are one factor, but experts say the biggest reason is a fall in fertility rates. As the number of young people declines, older people become a larger share of the overall population. This has big financial and political implications. It means older people, whose health care costs more, have fewer young people to help support them.

The trend varies widely – with some nations aging rapidly while others remain demographically "young." In a report issued by the Center for Strategic and International Studies in Washington, Mr. Howe and coauthor Richard Jackson have warned that this dem­ographic divergence could be a source of geopolitical instability during the 2020s. (Countries with looming "youth bulges" and high potential for civil unrest include Afghanistan, Iraq, the Palestinian territories, Somalia, Sudan, and Yemen.)

Other nations could face financial burdens and political tensions because of a different problem: a rapid decrease in young people. Russia is already becoming an extreme case of outright population decline. Other nations that could soon experience falling populations include South Korea (around 2020) and China (by about 2030).

If Asia will host the biggest gains in the number of people over 65, Europe can claim the title of being the furthest along in "aging." It will have just two working-age people for each person over 65 by midcentury, the United Nations predicts (compared with a 4-to-1 ratio in Asia).

The US is also aging. But in an important distinction from most of the developed world, America is poised for modest population growth that may make the transition less arduous.

Still, all this global graying isn't necessarily a bad thing. While the process is fraught with challenges, core elements of the trend remain positive.

Few would consider living longer a "problem," for instance. Plus, it wasn't long ago that demographers worried about the prospect of a Malthusian "population bomb" that would strain the planet to its resource limits. Although fears of environmental catastrophe haven't evaporated, the UN now predicts that the world's population could plateau within about 50 years and then start declining.

Moreover, if people find themselves working later in life, that's not automatically disappointing.

Carolyn May, in Britain, has been nudged into a new career at age 60. She was working as an educator two years ago when her employer, a college in Wales, ran into a funding shortfall. At age 58, she was suddenly jobless, departing voluntarily rather than waiting for a near-certain layoff.

But Ms. May used the setback as a catalyst for embarking on a new career that she had begun to consider even before losing her job. She invested her unemployment money to set up her own career consultancy called Still Much to Offer, which aims to connect older job seekers with potential employers. Now, as she reinvents herself, she's eager to promote the value of older workers like herself.

"A lot of people want to continue working – I want to," May says. "Lots of people still want to continue to because they have so much to offer."

May's manifesto could be an anthem of many older workers around the world – who view ­employment as an enriching adjunct to retirement – perhaps in new fields and with more flexible schedules. The shift is enabled by longer life spans and the transition of the world economy from manual labor toward knowledge work.

Yet not everyone is ready to keep working until age 75, or even 65. In America, 4 in 10 people end up retiring earlier than they planned to, often because of a health problem or the need to care for a family member, according to Anna Rappaport, a pension-policy consultant based in Chicago.

Indeed, the very concept of retirement is a relatively new phenomenon – a product of lengthening life spans over the past century and of governments' expanding social-support programs.

In many nations, older men are now working less than they used to, while older women are working more. Millions of people will still retire relatively young – either by choice or because it becomes increasingly hard to find jobs. But on average, the recent trend is for people to stay in the labor force longer.

PENSION PAINS

Alabama truck driver J.B. Wiley has plied the highways for the same company for 29 years. He says the talk in the US of raising the Social Security age simply makes him angry. He's worked his whole life with his eyes fixed on a magical number: 62, the current minimum age to receive benefits. And now some people in Washington want to push eligibility requirements out further?

The new retirement does mean some tough choices lie ahead both for individuals like Mr. Wiley and governments around the world. The aging workforce will call on individuals to forge new career paths later in life and for employers to help them. It will call on parliaments to repair endangered public-pension systems. And it will call on policymakers to hone new strategies to make workers of all ages more skilled and productive.

What's clear, fiscal forecasters say, is that many nations have a relatively short window of opportunity to adjust before the demographic transformation hits with full force. "Living standards in many countries are likely to decline unless the labour force can be made more productive or expanded," researchers at the World Economic Forum and Mercer, the benefits firm, warned in a 2009 report.

The report called for a mind-set shift from "challenge" to "opportunity," arguing that action is urgent but that creative thinking about pension, health care, and workplace policies can make a difference.

Pension expert Ms. Rappaport agrees. "I think it's solvable," she says. "We can make prudent decisions, [although] the decisions may not mean that we can have every single thing we want."

By some indicators, the squeeze is already arriving. Consider the financial storm in Europe over whether governments will be able to pay their debts. Although the financial crisis has been a catalyst, the underlying debt problems are tied closely to the demographics of aging and pension programs designed for an earlier era. France and Britain are just the latest to raise their retirement age.

Other countries, including Hungary and Bulgaria, have recently forced the transfer of citizens' private pension money to the state to make up for government shortfalls. Even Germany, viewed as Europe's bastion of financial stability, isn't immune from the looming fiscal pressures.

In the US, it's not clear if or when the eligibility age for Social Security will rise. When Congress does act, its approach may involve blending several steps to make the program solvent for the long term. But an age boost was one of the leading ideas debated, and mildly embraced, in the recent report of President Obama's bipartisan fiscal commission.

Separate from official retirement ages, governments can also try "softer" ways of getting people to work extra years. Some examples:

•Programs to help older workers find and prepare for new jobs. In fast-aging Japan, an agency called the Silver Human Resource Center is viewed by some economists as a model.

•Policies to make commuting or telecommuting easier for elderly workers.

Individuals, of course, have motivations for working that go beyond government incentives and penalties. In China, accountant Yang says she's staying employed partly to help her son buy an apartment. That's a big deal for him – enhancing his desirability as a marriage partner – but Yang's goal is also to give herself a place to live in later years.

Call it a bargain between generations, and perhaps a taste of family lifestyles to come. It's possible, for example, that many US boomers will also end up nesting with their children during retirement while continuing to work and contributing to household finances.

One 2008 survey in America, asking people over 50 why they are working, found a wide range of reasons. Financial goals like bolstering retirement income and maintaining health insurance (until Medicare kicks in) were high on the list, according to the report by the Families and Work Institute. But many people also pointed to being bored if they don't work (31 percent of respondents), wanting to feel useful (18 percent), or pursuing a dream (6 percent).

Others simply want to interact with other people or learn new things. Donna Gainey, 64, a town clerk in Bayou La Batre, Ala., appreciates the income but also the camaraderie that her employment brings. She's helped 20-somethings learn to navigate spreadsheets, and has enjoyed taking a cue from them when it comes to social networking, such as how to use Facebook.

In some cases, older workers are creating their own workplace culture by launching new businesses. In fact, according to research by the Kauffman Foundation, in recent years America's highest rate of entrepreneurial activity has occurred among people age 55 to 64, not among younger age groups.

Employers, too, are starting to adapt to the era of the graying workforce. Although age discrimination remains a problem in corporate America, a rising number of companies have specific policies designed to attract older workers (with things like flexible scheduling) and to make the most of their potential (through tailored training).

The retail pharmacy chain CVS cultivates senior workers by offering a "snowbird" program, enabling semiretired workers to split time between two work locations based on their seasonal migration.

Thirty years ago, amid an influx of women in the workforce, people wondered if men could adapt to the idea of working for a female boss. Now, says former AARP chief Mr. Novelli, workplaces are having to cope with older workers being managed by younger ones. "Both sides have to deal with that," he says.

In the end, demographic forces make it all but inevitable that people will be working later in life. Even truck driver Wiley figures he may have to do something other than hitting the recliner when he reaches age 62 in four years.

"Maybe I'd get another job," he says, filling up his rig at a truck stop in Theodore, Ala. "Well, driving trucks, of course. But local. Local."